Compiled by Angela Tan
SINGAPORE AIRLINES | BUY
TARGET PRICE: $12.00
FEB 14 CLOSE: $11.15
DBS Group Research, Feb 14
Upgrade to buy as we see SIA benefiting from a synchronised global economic recovery. We are more upbeat on the outlook as SIA should benefit from strong travel demand from the synchronised global economic recovery, which should keep load factors firm and improve passenger yields for its flagship segment. Meanwhile, the cargo business should also remain fairly strong as trade conditions stay fairly buoyant.
Contributions from key subsidiaries SilkAir and Scoot are also expected to improve as both regional and leisure air travel demand continue to grow.
Potential catalysts: SIA's share price could re-rate if it can demonstrate a sustained improvement in revenues, either from increasing its passenger yield or growing other revenue streams and/or materially lower its operating costs without affecting product quality and revenues.
COMFORTDELGRO | HOLD
TARGET PRICE: $2.12
FEB 14 CLOSE: $2.02
DBS Group Research, Feb 14
We maintain our hold recommendation with a target price of $2.12. We have trimmed our forecasts by 2 per cent to 3 per cent, on the back of lower average taxi fleet assumption.
While headwinds persist for its taxi business, this should be partially mitigated by improvements in its public transport business. Furthermore, ComfortDelgro's current yield of about 5 per cent could provide support for its share price.
We expect dividend per share to be at least maintained, given its lower capex requirements and net cash position. A stabilisation of the contraction in its taxi fleet, or approval of its Lion City Rental acquisition with better-than-expected earnings accretion (vis-a-vis our expectations) and improvement in operations could be catalysts for the stock.
SATS | HOLD
FAIR VALUE: $5.50
FEB 14 CLOSE: $5.20
OCBC Investment, Feb 14
We believe a near-term catalyst for Sats would be if it does enter into a partnership with Turkish Airlines (THY) for the provision of in-flight catering services to THY and other airlines at Istanbul New Airport, which we deem as a positive collaboration for Sats.
Over the longer term, we remain positive over Sats' outlook, driven by its strategy to diversify out of Singapore and into non-aviation business segments through several overseas partnerships.
So we prefer to wait for clarity over Sats' potential partnership with THY and opt to keep our fair value unchanged at $5.50 with this in-line set of results.
We believe investors should position themselves to accumulate at better entry levels, closer to $5.05 and lower.
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